2021 Leg Session, Colorado Department of Transportation, Exclusives, Governor Polis, Jake Fogleman, TABOR, Taxes, Transportation, Uncategorized

Fogleman: Don’t count on new transportation ‘fees’ actually fixing roads

When Governor Polis signed into law the major transportation bill—SB 21-260—earlier this year, taxpayers were left with the impression that new roads and traffic-reducing expansion projects were in their future. Unfortunately, they’re about to learn an expensive lesson in incredulity.

The bill notably violated the spirit of TABOR by raising taxes on Coloradans, disguised as “fees”, without their consent.

The bill creates a litany of new fee hikes for vehicle rentals, electric vehicle registrations, retail deliveries, passenger ride services, and per gallon purchases of gasoline and diesel that are projected to total nearly $4 billion over the next decade.

The fees are slated to take effect next year, just in time to add additional upward pressure on prices for important goods and services relied on by Coloradans already facing historic inflation concerns.

The cost schedule of the various fees are as follows:

  • Gas Fee ($1.6 billion): The new gas fee, additive to the state’s current 22 cent per gallon gas tax, will begin at 2 cents per gallon, increasing each year to 8 cents by 2028. After that, the fee will be set to increase with inflation.
  • Diesel Fee ($401 million): The diesel fee follows the same cost and schedule as the gas fee.
  • Retail Delivery Fee ($1.2 billion): A 27-cent fee will apply, in addition to sales tax and other existing fees, to goods delivered from services like Amazon and food delivery services like Grubhub.
  • Ridesharing Fee ($203 million): A 30-cent fee will apply per ride for ridesharing services like Uber and Lyft. As an added bonus of industry protectionism, the fee notably does not apply to taxis.
  • Car Rental Fee ($92 million): The existing $2 daily fee for car rentals will be indexed to inflation, and the fee will also be set to apply to car-share rentals lasting more than 24 hours.
  • Electric Vehicle Registration Fee ($322 million): The existing $50 registration fee for electric vehicles will be adjusted annually for inflation. New annual fees will be phased in on a 10-year schedule to offset owners’ tax savings by not buying gas. For plug-in hybrids, the fee will start at $3 and rise to $27, and for full-electric vehicles, it will start at $4 and rise to $96.

SB-260 also directed the Colorado Department of Transportation (CDOT) to “engage in an enhanced level of planning, modeling and other analysis to minimize the adverse environmental and health impacts of planned transportation capacity projects.”

In order to fulfill that mandate, the department is currently undergoing rulemaking that would require state and regional transportation planning organizations to meet greenhouse gas (GHG) emissions reduction targets outlined in another law, House Bill 19-1261, as they determine future projects.

According to the Denver Post, “The proposed rules, which the Transportation Commission could adopt in mid-December, functionally would result in the shifting of substantial project money away from road expansions, boosting projects that provide less-polluting alternatives to driving.”

If the department’s cost benefit analysis for the proposed rule is accurate, that “substantial project money” is estimated to be a cool $6.7 billion diverted from future road expansion projects, even as the state has absorbed a 15% boom in population and seen commute times increase by nearly 10% over the last decade.

Refusing to keep up with road capacity as the state’s population continues to increase is wholly irresponsible. Coloradans need new roads.

On one hand Governor Polis wants to electrify fleet vehicles like school buses and encourage Colorado’s commuters to do the same, and on the other he’s overseeing the proposed defunding of road projects that would help support those very same vehicles.

What’s more, the proposed rule goes further than comparable regimes in states like California and Massachusetts by containing an enforcement mechanism. This would allow the state to withhold additional transportation funding from planning organizations that fail to meet GHG reduction targets or show a sufficient willingness to implement GHG-offset projects.

It’s a stick that’s sure to take on new significance now that the state is set to be flush with Federal transportation money, courtesy of the bipartisan infrastructure bill.

It’s now estimated that $3.7 billion of combined federal and state money will be made available for Colorado highway funding over the next five years, much of which looks like it will be withheld from local officials desperate to see roads expanded.

“We strongly urge the Colorado Transportation Commission and the Colorado Department of Transportation to direct the additional Colorado allocation of federal funds to the interstate system including fully funding and completing the critical expansion of the federally overseen interstate roadway, the North I-25 Express Lanes Project,” Sandra Hagen Solin, of the Northern Colorado Legislative Alliance, said.

Despite the windfall, it’s not looking positive for projects like the North I-25 Express Lanes Project.

If you’ve had the misfortune of having to drive on Colorado’s roads for any length of time, you’re well aware of the sad state of affairs they’re in.

Traffic jams are the rule rather than the exception regardless of the time of day, and it seems like it’s getting worse all the time.

Instead of trying to ameliorate that problem, the state is attempting to impose regulatory burdens—in the form of climate impact reviews—on vital transportation projects that run the risk of creating project delays and driving up costs, if they’re even allowed to happen at all.

Polis’ plan to encourage GHG reductions amounts to engineering behavior through billion-dollar fee hikes and road congestion.

Jake Fogleman is a research associate at the Independence Institute, a free market think tank in Denver.

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